Judgment:
K.S. Radhakrishnan, C.J.
1. Central Bank of India has come up with these Letters Patent Appeals against interim order passed by the learned single Judge in Special Civil Application No. 2791 of 2009 on 9-4-2009 and against the order passed in Civil Application No. 4137 of 2009 staying the proceedings in O.A. No. 177 of 2003 pending before the Debt Recovery Tribunal, Ahmedabad (for short 'D.R.T.'). Special Civil Application No. 2791 of 2009 was preferred by the respondents herein for staying further proceedings in O.A. No. 177 of 2003 pending before the D.R.T. till final disposal of the Summary Civil Suit No. 3233 of 2002 pending before the City Civil Court at Ahmedabad and also for other consequential reliefs. When these Letters Patent Appeals came up for hearing, on consent of the parties, we called for Special Civil Application No. 2791 of 2009 as well for final disposal.
2. Central Bank of India (for short 'Bank') granted credit facility by way of Bank Guarantee limit of Rs. 25 lakhs to the first respondent company for its business activities of share and securities against the security by way of mortgage of immovable properties belonging to second and third respondents and personal guarantees of Directors and issued Bank Guarantee 90/100 dated 16-5-1998 favouring National Securities Clearing Corporation Ltd. (for short 'the N.S.C.C.L.'). First respondent was clearing member of said N.S.C.C.L. initially for a period of 12 months i.e. upto 15-5-1999 which was later extended upto 15-5-2001. One of the conditions of the Bank Guarantee which is of importance is extracted hereunder for easy reference.
The Bank undertakes that it shall, on first demand of N.S.C.C.L., without any demur, protest or contestation and without any reference to the Clearing Member and notwithstanding any contestation by Clearing Member, pay to N.S.C.C.L. such sums not exceeding Rs. 25,00,000-00 (Rupees Twenty Five Lakhs only) as may be demanded by N.S.C.C.L.. The decision of N.S.C.C.L. as to the obligations or liabilities or commitments of the Clearing Member and the amount claimed shall be conclusive as regards the amount due and payable by the Bank under the guarantee.
Letter of Extension also provided that 'the Bank shall be liable to pay the guaranteed amount only if N.S.C.C.L. serves upon the Bank a claim or written claim or demand on or before 15-8-2001'.
3. First respondent later received a letter dated 7-8-2001 from N.S.C.C.L. requesting to either submit fresh Bank Guarantee or renew existing Bank Guarantee for a further period of one year on or before 10-8-2001, failing which it was informed that the Bank Guarantee would be invoked. First respondent then filed Special Civil Application No. 6491 of 2001 before this Court against the National Stock Exchange of India Ltd. and the Bank and this Court on 10-8-2001 passed an order restraining them from invoking Bank Guarantee. Consequently, N.S.C.C.L. vide letter dated 14-8-2001 informed the Bank that the letter be treated as an invocation letter and the intention for invocation of Bank Guarantee and the Bank was requested to pay the amount upon vacating the injunction order granted by this Court. Special Civil Application No. 6496 of 2001 was disposed of as withdrawn vide order dated 27-12-2001. Consequently, interim order was also vacated.
4. N.S.C.C.L. then wrote to the Bank and also sent a notice through their Advocate reminding about their letter dated 14-8-2001 and called upon the Bank to honour their request. Consequently, Bank honoured the request of the N.S.C.C.L. and paid amount of Rs. 25 lakhs on 4-2-2002 to the N.S.C.C.L.. Bank has also vide their letter dated 5-2-2002 informed the first respondent that Bank has honoured the Bank Guarantee and also requested the first respondent to pay outstanding amount of Rs. 14,94,173-82 ps. Since, the amount was not paid, Bank invoked its powers under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'Securitisation Act'). First respondent on receipt of the said notice, filed Summary Civil Suit No. 3233 of 2002 before the City Civil Court, Ahmedabad praying for a decree for Rs. 25,93,980/- stating that the Bank had wrongly honoured the Bank Guarantee. Injunction was also sought for restraining the Bank from enforcing securities, however, the application was later withdrawn by the first respondent. Respondent Nos. 1 to 3 also invoked the writ jurisdiction of High Court of Delhi by filing Civil Writ Petition No. 6429 of 2002 challenging notice issued under Section 13(2) of the Securitisation Act, which was subsequently disposed of by High Court of Delhi vide its order dated 16-4-2004 relying upon the judgment of the Hon'ble Supreme Court in the case of Mardia Chemicals Ltd. and Ors. v. Union of India. Later, second and third respondents filed Appeal No. 20 of 2005 before the D.R.T. under Section 17 of the Securitisation Act against Section 13(2) proceedings which was dismissed by the D.R.T. vide its order dated 8-4-2008, against which the respondent Nos. 2 & 3 preferred an appeal before the Debts Recovery Appellate Tribunal, Mumbai which is pending consideration.
5. The Bank filed O.A. No. 177 of 2003 before the D.R.T., Ahmedabad against the respondent Nos. 1 to 3 and two others on 25-8-2003 praying for Recovery Certificate/Decree for a sum of Rs. 18,72,163-82 ps. with further interest. Respondents entered appearance and contested the claim leading evidence and O.A. was fixed for final hearing on 5-3-2009, and it was at that juncture, respondents have approached this Court with the present Special Civil Application.
6. Learned Counsel Ms. Nalini Lodha appearing for the Bank submitted that the attempt of the respondents is only to delay the proceedings initiated under the Securitisation Act. Learned Counsel submitted that the learned single Judge was not justified in staying further proceedings in O.A. No. 177 of 2003 when the D.R.T., Ahmedabad was about to pass final orders. Learned Counsel submitted that possibly Summary Civil Suit No. 3233 of 2002 and O.A. No. 177 of 2003 could have heard together since the cause of action in both the proceedings was the same. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of State Bank of India v. Ranjan Chemicals Ltd. and Anr. : 2007 (1) SCC 97. Learned Counsel also submitted that the Bank was bound to honour the Bank Guarantee as per the terms of the Bank Guarantee without any demur, otherwise, the Bank would be visited with the severe consequences. Learned Counsel also submitted that the Bank Guarantee was invoked in time by the N.S.C.C.L. vide their letter dated 14-8-2001, but could not be encashed due to the interim order passed by this Court. Learned Counsel also referred to the decision of this Court in the case of Govindbhai C. Chauhan and Ors. v. Chairman, Scheduled Caste Economics Development Corporation Ltd. and Ors. 1997 (2) GLH 210 and submitted that the respondents-petitioners have not approached this Court with clean hands and that too after a period of six years.
7. Learned Counsel Shri J. A. Adesara, appearing for the respondents-petitioners, on the other hand, contended that the Bank had committed an error in honouring the Bank Guarantee, especially, when there is disputes between the respondents and N.S.C.C.L.. Learned Counsel also referred to the letter dated 24-8-2001 written by the Bank to N.S.C.C.L. which would indicate that N.S.C.C.L. had not invoked the guarantee within the stipulated time. Learned Counsel also submitted that serious prejudice would be caused to the respondents if O.A. No. 177 of 2003 is disposed of before the Summary Civil Suit No. 3233 of 2002 is decided. Learned Counsel also submitted that Summary Civil Suit was filed on 5-8-2002 and just to defeat the claims of the respondents, the Bank has filed O.A. No. 177 of 2003 before the D.R.T. on 25-8-2003. Learned Counsel submitted that proceedings in O.A. No. 177 of 2003 have to be kept in abeyance till the Summary Civil Suit is disposed of.
8. In our view that there is no justification in holding up the proceedings pending before the D.R.T., Ahmedabad. Special Civil Application No. 2791 of 2009 was filed on 23-3-2009 to hold up the proceedings in O.A. No. 177 of 2003 after a period of six years. Further, the respondents had participated in the proceedings before the D.R.T. without any demur, filed written statement and adduced evidence and the matter was posted for final hearing and it was at this juncture, respondents have approached this Court. Respondents had also earlier approached this Court by filing Special Civil Application No. 6496 of 2001 seeking directions to restrain N.S.C.C.L. from invoking Bank Guarantee and this Court passed order on 10-8-2001 restraining the N.S.C.C.L. from invoking Bank Guarantee. N.S.C.C.L. had to send a letter dated 14-8-2001 to the appellant Bank invoking Bank Guarantee, but subject to the outcome in Special Civil Application No. 6496 of 2001. Special Civil Application No. 6496 of 2001 was disposed of on 27-12-2001. Further, it is relevant to note that first respondent had also preferred Special Civil Application No. 6429 of 2002 invoking the writ jurisdiction of the High Court of Delhi against the notice issued by the Bank under Section 13(2) of the Securitisation Act. Prayer was made before the D.R.T. to hold up proceedings in the D.R.T. All these facts would clearly indicate that the attempt on the part of the respondents was always to delay proceedings in O.A. No. 177 of 2003. Special Civil Application No. 2791 of 2009 was also filed after period of six years after institution of proceedings in the D.R.T. That being factual situation, in our view, this Court sitting in writ jurisdiction under Article 226 of the Constitution, will not be justified in holding up the proceedings pending before the D.R.T. Learned Counsel for the respondents raised various contentions with regard to the manner in which the Bank Guarantee was invoked by N.S.C.C.L. First of all, N.S.C.C.L. is not party to the present proceedings. Further, this Court in the writ jurisdiction will not be justified in expressing any opinion with regard to the various contentions raised by the parties in the absence of N.S.C.C.L. and also due to the pendency of O.A. No. 177 of 2003 and Summary Civil Suit No. 3233 of 2002.
9. Under such circumstances, we are inclined to allow both these Letters Patent Appeals and Civil Applications by setting aside the interim orders passed by the learned single Judge and dismiss Special Civil Application No. 2791 of 2009 without prejudice to the contentions raised by the parties in O.A. No. 177 of 2003 and Summary Civil Suit No. 3233 of 2002.